Should I step back from teaching to focus on studio business?
There are only 2 questions you need to answer to make this decision.
I meet a lot of studio owners in my travels, and there seems to be one thing that unites us—we all have a similar backstory. Somewhere along the way in life we fell in love with dance. We became dedicated to creating a career out of dance; we were passionate about the power of dance to change lives; and we were resourceful at using our skills and connections to make a difference in the lives of others.
I believe that studio owners are unique in this way, and this passion for sharing our love of dance is what drives us to succeed. But as we grow in our studio careers, we realize that the job of running a studio is about so much more than dance. We discover that we need to learn how to lead people, manage accounting, develop programming, understand new marketing trends and more. As your studio grows, the business needs can begin to rival the artistic side for your time and attention.
When this happens, you might feel like you’ve come to a crossroads. I know I did! This is where you have to start making decisions about the best place to direct your focus in this new season of life.
Should you step back from teaching to focus on studio business? Continue reading to see the only two questions you need to answer to make this decision.
Looking for more dance studio owner insights? Check out these other articles and resources:
There’s nothing more satisfying than the feeling you get when your studio is thriving! When the hallways are buzzing and the classes are full, you feel such pride in having grown your business to a successful place. But it’s not all sunshine and daisies, of course. Success can also mean growing pains in every facet of your business—especially at recital time.
As your studio gains families and dancers, you will inevitably need to decide how to present your recital in the best way possible, which may mean adding shows as you grow. The single 90-minute performance that worked well five years ago might no longer be a reasonable option if you’ve doubled your student count since then. While there’s no magic enrollment number that equals two shows (or three or four!) there are certain factors you can consider in your planning process.
If you are at the tipping point, keep reading to learn about the four factors to consider when deciding whether to add a second show for your recital:
Are you looking for some more recital tips and ideas? Check out these other articles and resources from Misty:
You’ve held your open house. You’ve put out your back-to-school social media campaigns. You’ve advertised in a local parenting publication. If you’re like me, you are feeling like you are on a roll for getting new students into the studio this time of year!
The good news is, new students are coming in and you are VERY glad to see them. The bad news is, maybe you feel like your existing students need a little extra attention now, that they need to be thanked and loved on for choosing your studio.
Retaining students—not just getting them in the door—is at the heart of sustaining your business over time and demonstrating that you have happy clientele. We often think of retention mid-year, when some kids want to quit, or at the end of the season, when we want them to re-register after recital. But this crucial back-to-school time can’t be ignored. It is an excellent time—right out of the gate—to show you personally care about your dance families and appreciate their business.
So classes are in session, and you’re meeting new faces every day….how can you best use this time to show the love? What can you do to increase retention and keep those families engaged?
Keep reading for 4 Way to Boost Dance Studio Retention Early in the Season.
Looking for more great enrollment and retention ideas? Check out the following articles:
Thanks to the new TutuTix POP app, dance studios can now accept credit card payments AT their recitals. POP makes it easier for dance families to make purchases at events, and can help generate extra income for studios. If you haven’t been able to accept credit cards in the past, or you’d like a simpler, low-cost way to accept credit cards and collect sales proceeds, take a look at these 5 ways you can now offer more to your dance families.
Dance studios who use TutuTix offer tickets to dance recitals online, letting family and friends of dancers purchase tickets ahead of time, without having to wait in line on ticket day. But, sometimes those family members and friends aren’t able to get tickets early, and instead need to purchase them on the evening of the event.
Now they don’t need to show up with cash in order to see their favorite dancers perform. The TutuTix POP app will simply scan their credit card, and you can give them a beautiful TutuTix ticket with their seat number for the evening.
Many studios offer packages prior to the recital that include flowers for dancers following the performance. But, depending on the studio, flowers might instead be offered for sale at the venue at the performance itself.
Just like tickets, dance studios can now receive credit card payments for flowers, making it that much easier for dancers to be celebrated after the finale.
Branded Dance Studio Merchandise
When we say merchandise we’re thinking:
And whatever other merchandise your studio has to show off some dancing spirit! A dance recital is the perfect time to set up a merchandise table, since family and friends will be excited about the event. Attendees are likely to see merchandise on the day of the event and buy items as gifts for their dancer.
Plus, you want your dancers wearing some studio swag around over the summer! Branded clothing items and other merchandise are a great way to get some word-of-mouth marketing for your studio going around in the local community.
Souvenirs (like DVDs)
Besides merchandise, souvenirs act more like memories of the event, and might include items like DVDs, photo packages, or souvenir playbills.
With TutuTix, you can offer packages for items like these before the recital itself that include bundled items, including a ticket to the event.
However, you can also take orders for DVDs or sell printed programs at the event, and can now accept credit cards for these higher-ticket items! Souvenirs can be a special way to remember a big performance, and by accepting credit cards you offer one more way for family to go home and receive a DVD of the evening’s dances.
Depending on the venue in which your studio performs, you may or may not be able to sell concessions during the performance. For those venues that do allow concessions, being able to accept credit cards can be a great solution if there isn’t an ATM nearby.
Some of the most common buyers of concessions are dance parents who may have arrived a little earlier in the evening to drop off their dancer on time, but haven’t had a chance to get dinner! If your venue allows concessions, they can be a big lifesaver for your dance parents.
Literally speaking, producing a recital is the act of looking back and showing what you have learned or accomplished over the course of a school year. It’s all about making great memories that can be enjoyed for years to come. The whole recital experience is full of memory-capture elements such as the recital program book, the celebratory trophy, the annual t-shirt and the commemorative DVD and group photos.
In fact, if you really think about it, most of what we promote at recital celebrates what has already been DONE. Today I hope to convince you that we should be spending as much, if not more time, promoting what IS TO COME at our spring shows.
Don’t miss promotional opportunities at your recital this year.
Keep reading for 5 ways you can serve your audience by promoting what’s coming up at your studio at recital 2017.
Are you looking for some more recital tips and ideas? Check out these other articles and resources from Misty:
Of the many hats studio owners wear, one of the most important ones is that of a marketer for our business. In fact, if you think of all of the ways you have marketed your studio over the past year you will probably be surprised to find out just how much time is spent promoting your studio to the next generation of dancers. When I reflected on my studio’s marketing initiatives over the course of this school year I came up with a long list including: printed brochures, postcards, Facebook ads, free trial classes, free dance days, community performances, camps, workshops, master classes, birthday parties, field trips, print ads in the local parenting magazine and various community partnerships.
But if you are only marketing to the public you are missing one of the most powerful marketing tools of all: re-selling to your existing client. Various studies report that it costs anywhere between five to seven times more to attract a new client than to re-sell an existing client. And there is no greater opportunity to re-sell the value of being a part of your studio to your families than the upcoming annual studio dance recital.
Make the most of your annual studio dance recital by adding these 5 Easy WOWs to make a great day-of experience for both dancers and attendees:
Are you looking for some more recital tips and ideas? Check out these other articles and resources from Misty:
Your recital is likely your largest production during the calendar year, and often can be a deciding factor whether or not parents will return with their children for the following year. Pricing your dance recital tickets correctly is an extremely crucial part of planning.
Editor’s note: This article was originally published January 21, 2015. It has been updated with current data as of February 2017.
First, decide your goal.
Are you just trying to cover production costs? Will your recital profits provide some financial cushion for the slow summer months? Are proceeds going to charity? Beginning with the end in mind will help you not only make decisions about the production, but will ultimately help you arrive at a price point that helps you achieve your objectives.
Next, figure out your cost.
Consider all of the cost drivers for the typical recital production. There’s auditorium rental (plus rehearsal), lights, sound, music mixing and licenses, security, insurance, staff payroll, tickets and programs, just to name a few.
Finally, do the math.
Use the simple formula:
Ticket Price = (desired profit + cost) / (Tickets per student x Number of students )
If you’re unsure about how many tickets per student, work with the average. In 2016, our studio clients sold about 3 dance recital tickets per student enrolled.
What do others charge?
At TutuTix, we know a lot about dance recital ticketing. Working with over 1,100 studios in the US, we’ve sold over $36 million dollars’ worth of dance recital tickets since we were founded in 2010, including $10 million in the spring of 2016 alone. Here are some interesting stats:
The average price for dance recital tickets in the US in 2016 was $13.74.
In 2016, the average studio sold more than $11,000 worth of tickets per recital season, and more than $4,600 per event (performance).
The most popular prices are $10 (21%), $15 (20%), $12 (15%), and $20 (10%), collectively, and account for more than 66% of all sales.
Can you charge more?
Apart from the overwhelming popularity of these prices, there is no identifiable correlation between ticket price and number of sales, which means that sales DO NOT SUFFER when tickets are priced higher. Further, there is no correlation between price and whether the ticket sold in advance versus at the door, meaning sales aren’t even delayed when tickets are priced higher.
There ARE compelling differences between tickets sold as general admission and those sold as reserved. Ticket buyers are willing to pay a premium for reserved seating, with reserved seats selling for an average of $14.03, over just $10.80 for general admission–an almost 30% difference! Check out our article on reserved seating here for even more in-depth information.
Need more information?
Our dance recital ticketing experts have helped hundreds of dance studios price, sell, and distribute their recital tickets. To request a professional consultation please contact us.
At a recent conference, I recently had the chance to share a presentation with studio owners on producing a profitable dance recital. I wanted to share it here; hopefully it will be of value to our blog readers as well! The major points of the dance conference presentation are below. Let us know if you’d like more detail on any of this information.
Three BIG Ideas to Make Your Recital More Profitable
Recital Fee vs. Online Sales
Many studio owners ask: “Should I charge a recital fee or just do ticket sales?” The answer is BOTH. The recital fee allows you to capture revenue at the beginning of the dance year, but a ticket sale presents an opportunity later in the year to maximize your profits in ways that add value to the experience your performers and attendees.
And that leads us to BIG Idea #1…
Big Idea #1: Bundle and Sell Online
Consumers spend more when they use a credit card than when they make purchases with cash. You can present merchandise purchase options with your ticket sales and customers will be more likely to buy, especially if they perceive that there is a bundle.
Big Idea #1: Bundle and Sell Online, cont’d.
All of our clients who sell merchandise online in advance report higher merchandise sales, with some reporting a 2x increase over previous years when they would accept cash only at the event. In addition, online sales enable you to more closely approximate the amount of merchandise you need to have on hand, so you have less inventory that goes unsold.
Big Idea #2: Inventory Management/Reserved Seating
Recognize that your seats are your inventory, and sell them in the most appropriate way to make more money. Seats in the front are worth more than seats in the back. If ticket buyers complain about a change in prices this year, explain that prices for the seats in the back are the same, but seats in the front are worth more, and therefore cost more.
So, why should you price seats according to their value?
Better experience for the ticket buyer = higher perceived value.
Offer perks for more loyal families.
Increases urgency to get the ticket = you get the money in hand sooner.
2016 Per Ticket Data
Reserved seating is a type of seating setup in which the ticket buyer can choose specific seats they want to sit in. Now, why is this important?
The average price paid in 2016 for a general admission ticket to a dance recital nationwide was $10.80, vs. $14.03 for a reserved ticket! That’s a 30% difference!
2016 Per Ticket Data, cont’d.
Moreover, the average gross per event with general admission seating was $1,715, while the average gross per event with reserved seating was $5,370! Don’t leave money on the table!
Big Idea #3: Generate Leads
Owners put forth an inordinate amount of effort into producing a recital, and most of the time, the only people exposed are the ones who already know how great their studio is! That’s such a waste! Your RECITAL is a prime opportunity to SHOWCASE your studio to prospective families and the community.
Invite “warm” prospects to your recital
Donate tickets to community charities
Leverage local schools / end of year activities
BUNDLE and sell online
Manage your INVENTORY wisely
Use your recital to GENERATE LEADS
So you want to sell tickets and merchandise online—now what?
TutuTix: The Easiest Way to Sell and Distribute Tickets to Your Dance Performances
How It Works: Step 1 – You Sign Up Online
It’s easy to get started with our easy online sign-up form. We just need some basic information in order to set up your events, including:
Your event info
The ticket prices
The date you want your tickets to go on sale
Your seating chart (if you plan on using assigned seating)
Your dedicated relationship manager will walk you through the process and help you fill in the blanks, and answer any questions you may have. After we have your information, our staff sets up your event, and you’ll get a final opportunity to review your event before we make tickets available to the public.
How It Works: Step 1 – You Sign Up Online, cont’d.
Codes? Comps? No Problem! With more than 1,200 clients nationwide, chances are, we’ve done every kind of presale setup there is. We can do:
Reserved seating, general admission and mixed reserved/general seating.
Promo codes, discount codes and comps.
Shopping cart for multiple performances or merchandise sales.
How It Works: Step 2 – Patrons Buy Tickets
When your tickets go on sale, your patrons can buy them:
Online at tututix.com/yourstudioname
On their mobile devices
On your Facebook page
From our toll-free call center
How It Works: Step 2 – Patrons Buy Tickets, cont’d.
For reserved seating, online ticket buyers can select their own seats with our easy-to-use seatPower seat selector.
How It Works: Step 2 – We Deliver Tickets
To Your Patrons – Your patrons can choose to get tickets delivered instantly to their email or smartphone, or to have souvenir tickets mailed to them. Tickets are mailed out immediately, and usually arrive within one week of purchase.
And to You – A few days before the event, we print any unsold tickets on the same keepsake ticket stock and ship them directly to you for FREE as part of our Door Ticket Kit so that you can have tickets on hand for door sales.
You Get Paid Weekly
We deposit ticket proceeds into your account weekly, giving you the flexibility to use those funds when you need them.
Your patrons can choose to have full-color, foil-embossed barcoded keepsake tickets mailed to them. We even print the dancer’s name directly on the tickets! Tickets are mailed out immediately, and usually arrive within one week of purchase.
Customizable Print-at-Home Tickets
Our print-at home tickets are customizable! You can promote upcoming classes, workshops or performances, or even sell advertising to your event sponsors!
Door Ticket Kit
Our FREE door ticket kit makes it easy to sell any remaining tickets on the day of your event.
iPhone and Android Scanner Apps
Need an easy way to scan tickets at the door? Our free scanner apps are available for iPhone and Android.
A dance studio is a large, open space suitable for a variety of activities, so why not get the most out of it? Dance studio rental is a fantastic way to maximize revenue. But don’t hand over the keys just yet – read our guide below to get started.
Why Rent out Your Studio?
Renting out your dance studio is a great way to generate extra income, especially during the slower summer months. Once you secure trustworthy renters, the effort on your end is minimal – you make money simply from letting someone use your space. Renting is especially helpful if you need to travel to attend a conference, perform in a show or even just take that well-earned vacation you’ve been putting off for years – with other people using your space, you can rest easy knowing that the power won’t be shut off at your studio while you’re away.
Dance studio rental also generates additional income by exposing your classes and services to new clients. Everyone that attends events held by renters at your studio will see firsthand the programs you offer and the space’s atmosphere, which can lead to new students. This type of exposure can sometimes be more effective than traditional marketing methods.
Who Can You Rent To?
The versatile design of a dance studio makes it a great fit for a wide range of activities. You can rent out the space for children’s birthday parties, and, if you have the resources, parents can hire one of your instructors to lead the party. The wood floors, high ceilings, sound systems and mirrored walls make dance studios a great fit for hosting fitness classes, like pilates and yoga.
If there’s a gym located near your studio, ask if they need extra space to hold their classes. Community groups and children’s scout troops are always looking for open spaces where they can hold events and meetings, too, along with local small businesses searching for an open space for team-building activities, retreats and training seminars.
Another creative way you can rent out your studio is by using it as a theater. Hanging black curtains on rods, adding seat risers and installing a few extra lights on the ceiling can transform a practice space into one fitting for performance. Dance Studio Life interviewed one studio owner who made an area of her studio workable as both a teaching space and a theater on a budget.
“You don’t have to have a large pocketbook to do the things you want to do. You just have to have a mission and share it—if you build it, they will come,” said Jonna Maule of Company Ballet School and Performing Arts Center in Spokane, Washington, in an interview with the site.
Once you’ve equipped your space with the basic theater equipment, you can rent it out to local performance groups, schools, dance troupes and bands. An added bonus is that your dancers now have a performance space in their studio, too.
“Successful renting depends on preparation and research.”
Liabilities to Consider
Successful and profitable renting depends on adequate preparation and research. Your first step should be to check whether your lease agreement for your facility allows you to rent out the space to other people, according to Dance Teacher magazine.
Safety is also another important consideration. Read up on your existing insurance policies and what they cover for outside renters and create a rental agreement outlining the risks the renter is responsible for that you can share with each client. It’s also necessary for the renter to have their own liability insurance so that you are not held responsible if they injure themselves during their classes or events.
With the chilly temperatures and few hours of daylight, summer seems ages away. While it’s hard to imagine lazy days of sun during not-so-fun January, it’s a good time to start thinking about how you will generate revenue for your studio during the summer months. Since many families go on vacation, ensuring your dance studio has an income from May to September takes some creativity. There are many summer dance ideas that your studio can keep revenue up during the summer months, including camps, intensives and workshops, and by renting out your facility.
During the summer, we’re all guilty of spending a few too many minutes daydreaming about the beach while we’re supposed to be working. But keep in mind that kids are even more susceptible to laziness and distraction during these dog days. To remain profitable over the school break, dance studios need to offer creative programs that keep students engaged and entertained.
Here are some summer dance ideas your studio can generate income this summer:
Summer camps are a win-win for everyone: Kids get out of the house, parents get some more time for themselves and dance studios get increased visibility. Camps can take place over a few days, a week or even a full month. Whichever duration you choose, the important thing is that your attendance policy is flexible. Since families have vacations and other commitments during the summer, letting students drop in and avoiding scheduling camp on Fridays and weekends makes the program convenient for parents. Also, allowing parents to pay for a total number of days, as opposed to one set fee for the entire camp, accommodates summer plans and reduces stress, which ultimately means greater profits for your studio.
Camps are especially great for young children, who are typically at home during summer break with lots of energy to spare! While your camp should include some elements of dance, it’s important to keep in mind that kids are raring to let loose and have fun. A creative camp theme that combines movement with crafts and other activities will garner the most interest and keep kids engaged.
Here are some easy theme ideas:
Princess Party: Kids will love living out their fairy tale dreams with this theme. Have them wear their favorite costumes to camp and spend the day dancing to songs from princess movies. Kids can decorate crowns as a fun craft, and lunchtime can be transformed into a royal tea-time!
Fairy/Butterfly Garden: Have the kids don sparkly wings for a day of fluttering fun. After learning some simple choreography, campers can “fly” around the room, maneuvering their way past some easy obstacles. The fairies or butterflies can pair up and learn a dance routine together that they then present for their friends. For a craft, the fairies can decorate wands and the butterflies can draw or paint colorful butterfly friends.
Pirates: A great idea from Dance Studio Life is offering camps that are geared more toward boys at the same time as your other camps, since parents are then more likely to enroll siblings. Mini-mateys will love a swashbuckling pirate camp, where they can learn simple dance-inspired “sword fight” routines (with foam cutlasses, of course!) and watch scenes from their favorite pirate films.
Intensives appeal especially to teenage and young adult dancers and are a great chance for students to dive into subjects that they may not have a chance to learn about during the school year. Try to make them as creative and in-depth as possible to attract the most students. To give your intensive an extra draw, hire “guest teachers” from local universities or big city-studios. Another idea is to focus your intensives on unique specialty subjects that expand students’ experience with dance. For example, Juilliard’s three-week summer intensive includes classes in yoga and improvisation, and collaborates with the music program. Another creative idea is the Dance College Preparation Intensive offered by Cornish College of the Arts, which provides students with technique classes in several styles along with lectures in helpful areas like essay writing.
One-day workshops are flexible and low-commitment, which makes them perfect for the summer months. To attract the most students, keep the purpose of the workshop ultra-specific. Dedicate the day to improving a specific set of moves, or focus on other useful skills, like choreography or improvisation. Think about an area that’s important for a dancer to learn in order to improve and grow, but that isn’t usually offered in regular classes. For example, Skidmore College’s Summer Dance Workshop includes a course in Performance Techniques.
“Rent out your studio for birthday parties or town recreation programs.”
Rent Out Your Studio
In addition to offering the programs above, renting out your studio will help you garner a higher income during the summer. Rent out the studio for birthday parties and town recreation programs or to school teams and fitness instructors. Consider the demographics and specific needs of your community to generate the most revenue from renting out your facility. DanceTeacher magazine profiled the owners of Downtown Dance Factory in New York City, who began offering birthday parties after noticing that there was a space in the local market.
“We knew from our own experience as moms that there was a demand for interesting, well-run birthday parties, and in downtown Manhattan, hardly anyone has room for that type of party at home,” said Hanne Larsen, one of the owners, in an interview with the magazine.
Beyond creating additional income, renting out your facility introduces new dancers to your programs. The more people that come into your studio, the better, and many parents whose kids attend events or parties at your studio will enroll them for classes come autumn.
Keep your studio hot this summer with these creative income generators.
No one in our industry would question that producing a recital takes the TOP spot for biggest project of the year. Coming in at a close second, however, is the process of ordering recital costumes. From concept to selection, from measuring to ordering, from try-ons to exchanges and alterations, recital costumes can be almost as time intensive as putting on the show! The costuming process presents an important opportunity for studio owners—it’s a chance to delight dance families with great service, cut down on wasted time and effort, and make a profit for your business.
Here are 5 TIPS to make your recital costume process a positive and profitable one.
#5 – Order EARLY. You know how we all tell our kids not to lose points at competition on the obvious (e.g. not pointing toes)? Well, ordering early is the “pointing toes” of costumes. It’s plain silly to know you can earn an early order discount with most companies and not do it. Spend some time over Thanksgiving break to get your ducks in a row for an early December order. If the early order discount doesn’t excite you, then get excited over the idea of a timely delivery!
#4 – Measure and order ACCURATELY. When I started my studio 17 years ago, all of the teachers would measure the kids in their own classes. I did it that way out of necessity—I didn’t feel I had any extra resources to pay someone to take that on. Well, my system may have been “free,” but it wasn’t without cost. With 15 different teachers measuring 15 slightly different ways, our costs on exchanges went through the roof. In addition, there were missed orders for kids who registered late and got missed by teachers altogether. I changed my process about ten years and now we have one person in charge of all costume measuring and ordering. Accuracy is up and exchanges/missed orders are down. Getting one person to champion this project saves me way more than I spend for her time.
The next 3 tips will supercharge your savings!
Looking for more great expert advice before your spring recital? Check out:
Remember when your high school math teacher told you that you’d need to understand algebra to get by later on in life? You probably scoffed, as many kids do. But we’re here again to go over more calculations that are essential to your dance studio’s success. Hang up your dance shoes and break out the calculator, and get ready for part two of our “Crunching the Numbers” series.
Any small business has to do a fair bit of marketing, and your studio is likely no exception. The fliers you print, the ads you run and the referral program you promote are all ways that you market your dance school in hopes of drumming up new business. But how are you supposed to know if your marketing efforts are working? That’s where metrics for marketing for dance studios come in. Read on to learn how you can calculate marketing return on investment, customer acquisition costs and more.
Marketing Return on Investment
First up is return on investment, commonly referred to as ROI. The concept is simple: You need to figure out how much business you’re gaining in relation to what you’re spending on marketing. For this calculation, you’re going to need your gross profit. You can refer back to part one of this series if you need a refresher on how to find this number.
To find marketing ROI, subtract your marketing investment – how much you spent on marketing services – from your gross profit. Then, you divide the answer by the marketing investment. So if your gross profit is $5,000 and you spent $1,000 on marketing, ROI would be $5,000 minus $1,000, then divided by $1,000. This gives you a marketing ROI of $4 – that means for every $1 you spent on marketing efforts, you got $4 worth of business.
This calculation is essential when you’re evaluating your marketing strategy season over season. It’s always good to try new campaigns – whether it’s direct mail, sale sites or something else – but you should evaluate the worth of a strategy after a given season. If your marketing ROI dips, chances are your new marketing efforts aren’t paying off.
Customer Acquisition Cost
Another important marketing metric is the customer acquisition cost, also called CAC. This is essentially how much money you have to spend on marketing in order to get one new student. The calculation is a simple one.
To find your CAC, set a defined time period. A good measure might be over the course of one dance season. Take the total amount you spent on marketing and divide it by the number of new students you acquired. So if you spent $1,000 on marketing and 20 new students signed up, your CAC is $50.
This metric by itself just tells you that you need to spend $50 to get one new student in the door. However, you can use CAC to calculate other more revealing numbers that will help you adjust your marketing and prices.
Time to Pay Back CAC
One way to use CAC to your advantage is to calculate how long it takes you to make back the money spent on acquiring each customer. You can calculate this in terms of seasons or months, whichever works for you.
To calculate time to pay back CAC, start buy subtracting your seasonal cost per student from the revenue per student. Divide your CAC by this number for time to pay back. So working off the example above, if you earn $500 per student per season and spend $300 per student, you’ll need to divide $50 by $200. This leaves you with an answer of 0.25, meaning you break even on a student’s acquisition cost after 1/4 of a season. Easy right?
If you aren’t a big fan of math, you’re not alone. An article in Psychology Today explained that almost 80 percent of college students described math as a skill they felt they couldn’t figure out. Even if math isn’t your thing, there are going to be quite a few instances where you need to crunch numbers as a dance studio owner. Yes, your calculator can help, but it’s important to understand the basic formulas and processes behind some standard small business profit calculations. Here’s some must-have math that studio owners need to know.
Calculating Gross Profit
Here’s that illustrious word that all studio owners hope for but many fail to achieve: profit. If you’re going to run a business and keep your doors open, you’ll need to know how to calculate gross profit, or the money you’ve earned from selling a service. The seemingly simple equation for gross profit is sales minus cost of services sold.
For studio owners, profit calculations are usually quite simple. Your revenue for a given season – or the money you collected from students – is your sales, and then you subtract any variable costs. Since you’re selling a service instead of a product, your variable costs will likely only include the salaries of hourly teachers, materials used in class and other expenses that incur as a direct result of holding class. Leave any fixed costs – such as full-time employee salaries, rent or mortgage payments, insurance, marketing costs or office expenses – out of this calculation.
So for example, if you charge $500 per student, and you teach 20 students this season, your revenue will be $10,000. If you spend $4,000 on variable costs, your gross profit would be $6,000.
Finding Your Gross Profit Margin
The next step in the important financial calculation is to figure out your gross profit margin, which is your gross profit expressed as a percentage of your revenue. Don’t worry – it sounds harder than it is!
To calculate gross profit margin, simply divide your gross profit by your sales, and then multiply by 100. Following the example above, $6,000 divided by $10,000 is 0.6. Multiple this by 100, and you get your gross profit margin of 60 percent.
Using Gross Profit and Gross Profit Margin
You may think that you’re in the clear if your gross profit increases year after year, but this isn’t always the case. Your gross profit margin is actually a better indicator of how efficiently your business is performing. If you notice that your gross profits are increasing but your margins are on the decline, this indicates that your spending is outpacing your revenue growth. Be wary of this trend! If your costs grow too fast, you could be heading for financial trouble.
Crunching Net Income Numbers
As you may have gathered, gross profit isn’t equivalent to the amount of money your studio is left with at the end of the year. You still need to take into account those fixed costs that remain stable from month to month. According to Entrepreneur magazine, these expenses include:
Wages of full-time workers
Once you’ve added up all these fixed costs, you’re ready to find net income. Subtract this number from the gross profit you’ve calculated. So if your fixed costs are $5,000 and your gross profits were $6,000, your net income would be $1,000. This may not seem like a lot of money, but it’s always a good thing when your business has a net gain at the end of the year. If your net profit turns out to be a negative number, this means you’ve sustained a net loss, and you’ll need to find a way to lower your costs or increase your revenue.
Check back soon for more math-related tips that are key for studio owners!
As a consumer, you’re probably a big fan of Groupon. After all, who doesn’t love getting 25, 50 or 75 percent off services from their favorite stores and restaurants? While this site is very popular with consumers – it boasts 70 million subscribers – Groupon isn’t always a win-win experience for business owners.
A study from Rice University showed that Groupon promotions aren’t always profitable. Of the 150 businesses surveyed, 66 percent said their promotion generated money. Despite more than half making money, just 42 percent said they would consider running a deal again. Keep these numbers in mind while you’re deciding whether to use the daily deal site.
If you’re considering offering a discount with a dance class Groupon, here are some pros and cons that you’ll want to weigh before clicking “OK.”
Pro: Groupon Helps Create Your Deal
No need to fret if you’re not a whiz with words. Groupon will not only help you pinpoint services that will sell effectively, but an associate will also give you a hand with the web copy. This comes in handy if you’re not so great at crafting compelling advertisements.
Pro: Bringing New Customers In
Getting new dancers in the door is always a good thing, especially if you’re the new studio on the block. If you choose to run a dance class Groupon deal, it’s safe to bet that you’ll see some new faces in the studio. People love discounts, so this is a good way to edge out some of the more established studios in your area and give your school a competitive edge.
Con: Having to Discount Your Services
While you’ll likely get some new students out of your Groupon promotion, you’re not going to make the same money as you do from regular dancers. No one is going to purchase your deal if you only discount 10 percent – the appeal of daily deal sites is that businesses offer services with steep discounts.
Because you’re only going to be making a portion of your usual revenue from Groupon deals, make sure you will still be bringing in enough money to pay your fixed expenses. Otherwise, you may be better off using traditional marketing tactics to bring in customers who’ll pay the full rate.
Con: Groupon Takes a Cut
After you discount your prices to attract customers, Groupon is going to take a portion of the money you make. The New York Times explained that Groupon usually takes 50 percent of the revenue, so if you sell $500 worth of classes, you’re only going to receive $250.
This can be problematic if you had to discount your prices a lot to begin with. If you offer your services for 40 percent off through your promotion, then Groupon takes half, you’ll end up with 30 percent of the money you would have made if the customers paid full price.
Pro: Getting Paid Immediately
However, one upside to the Groupon method is that you get paid right away. Even if the Groupon buyers never show up to redeem their classes, you’ll still get your money from the site.
Con: Attracting Bargain Seekers
Inc. magazine explained that another less-than-desirable outcome of Groupon is that it attracts people seeking deals. Many of the students who come in as a result of your promotion may only be looking to redeem their classes – not to sign up for more. As a studio, one of your long-term goals is likely to build a solid base of returning students, and if Groupon buyers are only interested in the bargain classes, they’re not going to contribute to this objective.